Correlation Between Heidelberg Materials and SEALED AIR
Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials and SEALED AIR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Heidelberg Materials and SEALED AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heidelberg Materials AG and SEALED AIR , you can compare the effects of market volatilities on Heidelberg Materials and SEALED AIR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Heidelberg Materials with a short position of SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and SEALED AIR.
Diversification Opportunities for Heidelberg Materials and SEALED AIR
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Heidelberg and SEALED is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR and Heidelberg Materials is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Heidelberg Materials AG are associated (or correlated) with SEALED AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALED AIR has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and SEALED AIR go up and down completely randomly.
Pair Corralation between Heidelberg Materials and SEALED AIR
Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 2.46 times more return on investment than SEALED AIR. However, Heidelberg Materials is 2.46 times more volatile than SEALED AIR . It trades about 0.15 of its potential returns per unit of risk. SEALED AIR is currently generating about -0.17 per unit of risk. If you would invest 12,345 in Heidelberg Materials AG on December 12, 2024 and sell it today you would earn a total of 3,600 from holding Heidelberg Materials AG or generate 29.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heidelberg Materials AG vs. SEALED AIR
Performance |
| Timeline |
| Heidelberg Materials |
| SEALED AIR |
Heidelberg Materials and SEALED AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heidelberg Materials and SEALED AIR
The main advantage of trading using opposite Heidelberg Materials and SEALED AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials position performs unexpectedly, SEALED AIR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SEALED AIR will offset losses from the drop in SEALED AIR's long position.| Heidelberg Materials vs. Data Modul AG | ||
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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